tv Worldwide Exchange CNBC January 16, 2013 4:00am-6:00am EST
this is today's "worldwide exchange," i'm ross westgate. >> i'm kelly evans. these are your headlines -- >> two japanese airlines ground their 787s after a dreamliner makes an emergency landing. transport officials worldwide step up scrutiny as boeing's safety troubles escalate. a helicopter crashes in central london. cnbc confirms it happened in the south of the capital. and auto stocks take a hit after europe logged a 17-year low in new car registrations in 2012. down 16% in december alone. it will be a big day for bank earnings in the u.s. reports due out from jpmorgan and goldman sachs before the opening bell.
all right. it's the middle of the week here on "worldwide exchange." we come to you with reports of a helicopter crash in london south of the river, vauxhall. we know emergency services are attending the situation at the moment. apparently the helicopter had just the pilot in it. there may well be others involved on the ground. >> what do you know about the area? >> it's very close to -- close to where the new u.s. embassy is going to be built. a major transport junction, as well. a major transporting junction south of the river, southwest of london, as well. it's not far from -- actually not far from the heliport, just further down the river. >> there's only one commercial helipad in london which i learned during the olympics, barclays helipad. >> that's the helipad.
yeah. >> barclays had invested to help get capital into the thing and get it up and running. they usually have a handful of charter flights or what would you call a charter flight for a helicopter? the equivalent in and out during the day. the question is whether it's related -- we have very little information at this time. we're expecting to get more news throughout the program. as we do we'll bring you the detail including any images that may come through. >> yeah. we will. meanwhile, other things coming on today's program -- we're in vienna with the governor of australia's central bank. this after the spanish prime minister said creditor countries in europe's core need to do more to stimulate growth for everyone else. we'll get the latest from silicon valley. how much will investors like this facebook graphic search? we get the latest updata -- update after boeing grounded the entire 787 fleet. we'll head to new york after goldman sachs and jpmorgan report earnings and give you a sense of what to expect.
first, japan's top two carriers, a&a and japanese airlines, have granted all their boeing 787s today -- grounded all their 787s today and tomorrow after an emergency landing earlier. this follows a battery fault warning. all passengers and crew were evacuated safely, although five people were slightly injured. we've been following the story and have more on the line from tokyo. it's a big step for two airlines to ground an entire fleet of planes. what investigations are being carried out, what are they saying about the prognosis for getting them back in the air? >> it is a big decision as you say. i think at this juncture in this series of events that we've seen on the dreamliner 787, i think the unanimous feeling among analysts i spoke to and of course the passengers and their airline people that i have spoken to today, their decision was to err on the side of caution. we haven't had an update about
this incident which took place about nine hours ago in the western part of japan. we still don't know whether or not the smoke was actually caused by a battery malfunction which the airline, al nippon airways is saying the captain was alerted to, that led to the emergency landing in japan. for the time being, they have made no statement as to what's going to happen tomorrow. both japan airlines and al nippon have plenty of flights scheduled for tomorrow. we still don't know whether or not they'll be operational. japan airlines and al nippon are not the only carriers in asia. there are others that have made comments throughout the day. quantis saying recent incidents do not change any of their plans for the future of the dreamliner 787. air india, for example, also a big customer for boeing. they, too, have said there have been no changes in their schedules, as well. i think the transportation ministry here was fairly quick to respond to this incident here
in japan. they are on the ground investigating. we do not have the details yet. we know the battery was made by a kyoto-based company. i mention this because this is a multinational endeavor, the dreamliner 787. there was cutting edge technology used to create this product. i think that's one of the focuses for investors. so for the time being, the -- both the airlines and ana japan airlines have grounded their flight. at the moment we don't have a lot of detail coming through on this investigation yet. >> we should remind people that japan, as you say, has been an important investor or presence i should say along with boeing in development of the aircraft. one of the reasons the story's getting so much international attention is that it's -- a lot of japanese airlines, first out of the gate to use boeing planes. there's a lot at stake here. >> absolutely. i think not only for the carriers, as you point out, but for the suppliers. this is a large multinational
endeavor, as i pointed out. and i think it's particularly noteworthy for a company like japan airlines which, as you may know, has emerged from bankruptcy filings, they went public. they reemerged as a public entity a couple of month ago. and the dreamliner 787 was going to be pivotal in part of that sort of revival process, as well. so i think this is, of course, not just a domestic story but particularly important to japanese carriers because of some of the elements as you pointed out that are involved. >> all right. thank you for calling from tokyo on the story. thank you very much. you're looking at shares of a couple of those companies affected, clearly taking a hit. >> it is worth pointing out the only ever airline at the moment in asia that has that dreamliner service is air india. they're look at what to do -- >> aside from japan. >> yes. the only other airlines in asia that have that -- >> got it. >> is india. i haven't made that clear.
right. what does it mean for boeing's biggest competitor, airbus? we have more from paris. >> and of course we know how technical problems could impact commercial activity. if you remember last year, the european planemaker came up with a technical solution for the small cracks that were found on the super jumbo 38 0d. still, it had a direct consequence on its orders, potential buyers probably waited or canceled orders of this super jumbo. that's what the chief commercial officer said recently. he blames the macro economic condition but also the technical problems of the super jumbo 380 for the poor results. last year, airbus only received a couple of orders for that super jumbo which is only a very, very small amount of the total orders that the company will probably announce tomorrow morning. others will present tomorrow the commercial results for 2012, and it's likely it lose its crown as
the largest planemaker for the first time in more than ten years, according to the "wall street journal." airbus is going to announce more than 800 orders for the full year. this is more than its own forecast of 650. but this is going to be much lower than the 1,203 net orders that boeing received for the last year. over to you. >> all right. thank you very much indeed. let's bring in our guest for the first part of the program, global editor of lex at the "financial times." happy new year. nice to see you. we'll talk about banks and things. want to get your reaction, though, to airbus with cracked wings, now boeing with electrical and battery problems on their dreamliner. what's your take on it? >> well, i guess from an investor point of view, glad no one -- there was no crash or fatalities. how do you consider boeing as an investment? i guess the first thing is that this plane is the future. there are going to be thousands of them.
it's never going to be a supply issue. these planes are going to go in the air. there are 50 around at the moment. i guess the question an equity investor has to ask is, does it push back slightly the cash flows that are going to accrue to boeing? boeing's roughly at $76. it's been roughly at that level for 12 months now. i think at this stage you can say that the answer is no. so if there are going to be any falls in the stock, you have on this consider it a buying opportunity. >> no one delayed orders. so far no one's got dream liners saying anything else -- >> no, there are 900 orders, there will be thousands sold eventually. we spoke to a couple of engineers last year -- sorry, last week when this first happened. and they said, you know, like you said on your program, this is really no different to the glitches that have occurred with the 7 and other introductions -- the 777 and other introductions in the past. >> is japan overreacting then? >> it's never -- you should never overreact in terms of
something that weighs that much and flies in the air. but airplanes have very complicated, and this is a big step in terms of technology. >> right. >> it's amazing that these things get airborne in the first place, frankly. >> good reminder. >> i'll be interested to find out if this is a design problem or just a build issue. bear in mind, a delay. there's a question mark whether they rushed to build them too quickly. work out what the issues are. >> we'll have more later. in the meantime, today's u.s. earnings will be topped by a pair of big banks including jpmorgan and goldman sachs. jpm reports fourth quarter results at 7:00 a.m. profits expected to rise 29% with revenue up 10%. the loss isn't reflected -- that effect won't be seen in this quarter's earnings, but the company is issuing two separate reports on what exactly happened and the fallout since. ous, new cfo, marion lake, will run the earnings call for the first time. goldman sachs will reported its fourth quarter figures half-hour later at 7:30 a.m. eastern.
profits are forecast to double with revenues rising about 30%. analysts looking for an increase in investment banking and lending revenue. we can take a look at their shares in early frankfurt trade today. jpm up almost 2% in session highs. goldman sachs adding .3%. and stuart kirk with us. what is accounting for the move in jpm today? we heard that it sounds like goldman's going to have the banner quarter. >> yeah. i mean the fourth quarter's always tricky because it's generally weak for investment banking. and these stocks have moved extremely well last year. they are some of the best performing sectors in 2012. so the question people ask is, can we see anything from the fourth quarter that will tell us what the environment in 2013 is like. i guess my answer to that would still be no. fiscal cliff issues, europe, the election, tropical storms, et cetera, and there's still no real clarity on what the business models, investment banking are going to look like
as we head toward three. it's going to be much better numbers than a year ago. numbers are going to be slightly down versus the third quarter. and -- to my mind, there's still really nothing we'll be able to take away from the numbers in terms of -- >> which is frustrating because we're at a time when we are trying to re-evaluate what the model is going to be, what earnings will look like going forward. in your view, what is -- what is the investment case for these investment banks today? >> well, the investment case for an investment bank is that when they work very well, they are extremely capital -- if i advise a company and get a fee for ecm or m&a deal, it requires no capital, and i get a lot of money. that's very attractive. the second thing is that one thing your viewers may not realize, banks are more cyclical than people believe, even investment banks. if you are at all pullish about the u.s. economy, the turning in the house prices, europe, for example, these things will make
an extraordinary amount of money even if they require more capital because banks are extremely leveraged institutions. and you only need a small amount of top line growth for them to make a lot of profits. >> if you to pick u.s. banks versus the rest of the world, what do you like for 2013? >> it bizarre thing is that last year everybody was upset about the masters of the universe and were talking up their retail and sort of consumer arms because credit losses were falling. interestingly, this year i suspect bank with more exposure to independent banking will probably do a lot better much to the chagrin of politicians i suspect. why is that? the m&a pipeline's looking all right. u.s. economy's looking slightly better. and we're still pre-basal 3. >> we'll leave it there. lex on wex, can we use that?
>> yeah. >> is that all right with you? >> fine by me. >> lex on wex. >> stuart, thank you very much. we will be talking later about divestment. merger and acquisition activity this year divest back -- deal flow potentially helping banks. a slower than expected recovery inevelnomies is weighing on global growth as countries continue to battle spending cuts, high unemployment, and weak consumer confidence. this according to the world bank which just cut its latest 2013 global growth outlook to show 2.4% growth, down from 3% previously. >> talking about growth, the german government expected to slash in half its full-year outlook when it releases its annual economic report later today. according to the "business daily" there will be forecast growth of around .5%. and representatives from central and eastern europe are gathering in vienna as we speak to discuss ways to jump-start growth and offset the effects of the eurozone debt crisis. joining us from vienna, our very
own mr. geoff cutmore. what are they saying down at the conference there and about trying to get something going with europe? >> reporter: well, you've just read two stories that represent big nails in the coffin as it were, if that's not too melodramatic. as you talked to the ceos here at the conference, they complain and gripe about the slowdown in core europe. the fact that germany may have printed negative growth for the fourth quarter which represents a key market for many of these central and eastern european economies is really very bad news. so the reality is the growth s have disappeared here. the fdi isn't as strong as it used to be, residential construction and commercial construction markets are basically still flat at this stage, and bank lending is sc r
sclerotic. many debts are struggling with bad debts. the message i've been picking up while i've been here is really that many of these businesses in this region are looking outside of europe to try and find some new markets and new opportunities. and they to some extent think financial markets right now, capital markets are a little bit too complacent about some of the challenges that still exist in this region and in the broader european land mass, ross. >> yeah. an interesting thought -- i was thinking, companies there looking outside the -- outside europe. in the u.k., this big e.u. debate about how important is european trade in the future, as well. you've also been speaking to the prime minister of latvia. what does he have to say? >> reporter:. latvia is a poster child, isn't it, for those on the right economically if you like who think that austerity and paying dunn your debts is the way that
you restore growth. latvia had a very difficult crisis. they had negative growth and a contraction of the economy of somewhere around 20%. last year, they grew 5%. this year they're expected to grow 3.5%. and that's because they front loaded a lot of the cuts in government spending, and they forced down wage rates. i caught up with the latvian prime minister earlier this morning on "squawk box" and said, well, you've done it, greece, spain, italy, portugal, perhaps they should be learning lessons from you. let's listen to how he responded. >> i wouldn't go as far as now to tell exactly other countries what should be -- what they should be doing because each country has its own difficulties and its own way out of the crisis. but in general, we see that austerity is part of the solution, and indeed we all see that 25 out of 27 e.u. member
states has ratified fiscal -- committing themselves to fiscal discipline. >> reporter: one of the things he did say, the prime minister said that at least the ecb, central bank, had been active, ultra low rate. people shouldn't really grumble about what they've been doing in terms of assisting countries, managing their difficulties. we're going to speak with one of the council members and head of the austrian central bank, ewald novotny, coming up in a little over 30 minutes, ross. back to you. >> thank you. just a quick update on the situation we've been telling but in london where there has been a helicopter crash in the south of the city. british police are saying nothing to indicate the london helicopter crash is linked to terrorism. some questions have been raised by the closeness of the site to the u.s. embassy that will be constructed and open in several years' time. british police saying nothing at the moment to indicate there's
any terrorism link. ross? >> yep. thanks. we'll get up to speed with global markets. european markets subdued start, an hour and 20 minutes nearly into the session. footse 100 down, ibex down as well as cac. stocks under pressure as we might have expected. as far as bond markets, we'll show the yields at the moment. retail sales numbers out of the u.s. yesterday, treasury yields low, 1.25%. with that, syndicated 15-year, $6 billion they raised from that yesterday, italy's nearly funded 10% of their requirements for the year. here we are, only the second, third week of january. spanish yields over 5%. the bund action today, currently yielding 1.5%. as far as currency markets, the euro/dollar at 1.3277. couldn't sustain it over 1.34. some comments saying the euro
exchange rate is dangerously high. stepping down, as head of the euro group. they'll decide the success on january 21. dollar/yen, 87.88. and aussie dollar is over 1.0540. we'll bring you up to date with events in asia. we have more from singapore. >> sure, thank you. those asian markets finished in the red. the nikkei suffered its worst daily showing in eight months despite upbeat machinery orders data for november. a rebound in the yen fueled profit-taking in exporters. shares of al nippon airways slipped 1.6% today. and some boeing suppliers such as the battery maker gu uasa tumbled. the shanghai composite pulled back .7% after hitting a 7.5-month high yesterday. developers continued to lose ground after strong gains since
q4 last year. this despite talk of delaying the property tax reform due to insufficient planning and law making. in hong kong all eyes on the chief executive's maiden policy speech with a focus on measures to tackle the housing crisis. developers reversed earlier losses to finish in the green, but telecos and energy majors dragged the market lower, ending down by a minor .1%. elsewhere, south korea's kospi finished marginally in the red. apple suppliers continued to weigh down the market over demand concerns on the iphone 5. the australian market bucked the down trend with the defense of telecos and health care stocks lending support. the sensex in action trading down by .5%. back to you. >> all right. thanks for that. we'll take a break. still will to come, hong kong selling out new plans to show up housing woes.
pollution, and improve welfare. he said it's necessary to curb speculative activities in the real estate sector given the persistent housing shortage. he said more land would be allowed for development and that 67,000 private units are slated to come on to the market in the next three to four years. joining us from hong kong, andrew yun g, chairman of international consultants. what's your assessment of the problem with chinese property? and how -- are they right to try these measures? >> i think that hong kong is now in the depth of a lot of contradictions, that being from premier wen jiabao earlier on. the housing shortage and also the -- the division of the society to the rich and the poor and those without properties and
those with as well as big businesses against small businesses against ordinary people. and between the hong kong belongers and also people from the mainland. there are a lot of contradictions for them to deal with. i think the orders problems, housing shortage, in fact, feeds into a lot of social discontent as people struggle to keep up with rising prices. and this is because over the past decades, land supply has been restricted. a lot of the sites are not fully utilized. what they're trying to do is really to push more land on to the market, at least during the term by relaxing terms and reducing industrial states which are weakened because of the move of the industry into the mainland. but also looking at various sites in the new territories,
for example, for kind of newtown development. so i think this is also good news. the trouble is that a plot of land takes a bit of time. and also there is a tremendous demand for housing and the short-term demand cannot be met quite easily. although, of course, during this policy address there are short-term measures, various other sites being auctioned. but overall, this is likely to take some time. >> is there any tax policy that would be effect 95 helping out in terms -- effective in helping out in terms of redevelopment and new build? >> yes, i mean, i refer to the making use of a lot of the vacant industrial buildings. at the moment a lot of them are being used for storage, but also quite a number are even turned into illegal housing for those who can't afford the how
property prices. the trouble is that they are scattered throughout hong kong. and some of the areas are not well served by public transport and are not particularly attractive. but -- but in the short term, that could be welcome and also pushing the kind of public housing program to answer the demands of something like 200,000 people on the waiting list. so i think that all these measures would be welcome, but i think as i said, it's going to take a little bit of time. >> yeah. look, what does this mean for investors in hong kong property, though, bottom line? >> i think that the relaxation of height restrictions, for example, would be welcome news for property investors who may have bought a bit of land or
some buildings which are subject to high restrictions. and some of these areas could well be attractive to investors. for example, those that overlook the harbor and so on. so that's welcome news. but also opening up more land in the new territories, particularly areas which are not too far away from the city centers. that would release a lot of potential investment sites. the thing is that it's not just releasing the land, the government is going to put in a lot of investments in pushing up -- pushing up the kind of infrastructure to serve those sites. so in the short term, that's also good news. also, this would take away a bit of the unhealthy euphoria, bidding up prices through unsustainable levels which could only end up in a crash. >> okay. >> so i think that this is also a -- some stabilizing effect. >> all right.
we'll leave it there. andrew leung, chairman. giving us a reason to go to hong kong and check out the state of the property market, don't you think? >> yes. there's a plan. >> should we start an internet petition for those who want wex to come to hong kong? >> yes. if you'd like us to come to hong kong, e-mail us, email@example.com, or tweet. our next guest says 2013 is going to herald a new door at least in terms of economic growth. we'll finally enter the post crisis raising an eyebrow.
and the headlines from around the globe -- two japanese airlines ground their 787s after a dreamliner makes an emergency landing. transport officials worldwide step up scrutiny. a helicopter crashes in central london. cnbc confirms ambulances have arrived at the site near vauxhall train station in the south of the capital. police say there have been two fatalities. auto stocks take a hit after europe logged a 17-year low in new car registrations in 2012, down 16% in december alone. and it's a big day for bank earnings in the u.s. we get reports from jpmorgan and goldman sachs before the opening bell.
just to recap, police are suggesting two people have died after a helicopter crash in central london. just south of the river near vauxhall. in fact, very close to the new covenant garden flower market, as well. we'll keep our eyes on reaction to that. they do not believe there is any link to terrorism. as far as european equities now, european stocks are softer this morning. we're about down sort of half a percenta avera-- percent on ave. the, becks over .3% lower. society generale's global strategist says there's "a once in a lifetime opportunity to buy european stocks," sparking a flurry of chatter. for more on his views and whether there's a shift in his famously bearish stance, you can check that out at cnbc.com. what does our next guest
think? heading of trading and ample y ffly -- amplify trading. bullish when you look at the tax performance last year. >> i think he's looking at the long term rather than -- he missed the boat on a very, very nice speedskate ike to the upsi. long term, five-year horizon. >> you share that view? >> definitely. >> you have this -- this year we're going to enter the -- finally enter the post crisis era. what makes you say that and when -- when will that happen? >> don't jump the gun here. i think the first quarter, possibly second quarter might be neutral to even negative. i think in terms of markets -- >> yeah. >> but i think the second half of this year will be finally coming out of this, offloading the shackles of this financial crisis. what will be the lead measure of
that will be peripheral europe returning to economic growth. >> you know, i think people have been calling for a second half rebound every year that i've been working. >> yeah. well, last year it was a final quarter rebound in terms of markets, that is. but it's not -- >> not in the u.s., though. >> all right. well, the final quarter in terms of the s&p -- had a big push to the upside. in november and december, big rally. >> i was looking -- i was looking at the quarter. >> okay. we were up on the quarter just about. anyway, you know, it's not an uncommon view this. i think the best case scenario is people are talking about the second half of this year -- >> that's why i'm raising caution. we're hearing again this idea that growth will finally look better, it will kick in, there will be a virtuous cycle -- >> the reason i think it's a powerful argument is just looking at europe, it's been the biggest risk for the last three years. and i mean, check out some of the bond yields in spain and italy. you know, the spanish ten-year
bond yield dropped below 5% last week briefly. this is back to levels that we haven't seen since the crisis began, since before the crisis began. now this gives these -- these countries, you know, the breathing space to do that final part of, you know, the austerity. they still need to put through austerity. but it's becoming less of a drag on the economy. we'll see their economy return to growth. and you can't ultimately pay down debt until you've got economic growth. >> and just to get a little specific, what trades do you like then given the scenario that you're laying out? >> i think generally -- i think the story about europe is a global one because it's been the biggest drag on global growth. we've had a global confidence cries us that has prevented all of this cash -- if you look at u.s. companies, there's $2 trillion of cash -- >> trades, trades, pierce, trades. >> equities primarily. >> okay. >> and then you can pick.
i think it's still going to be a macro move. you say trade, you want me to talk about sectors or geographic locations, fine. i think generally equities will go higher. peripheral europe will still outperform as will china. i like china particularly because it's undervalued. i think they're going to benefit from the european story. >> we'll talk about what needs to happen in the bond markets, as well. >> yes. >> in relation to that. >> that's right. >> hold that thought. >> first, new car registrations in the european union did slump by 16% in december from the previous year. that's the sharpest decline since december, 2008, the dark days of the financial crisis. the u.k. was the only car market to record growth. demand in spain skidded by almost a quarter. italian new car registrations were down 22%. in germany even, they were down 16%. >> fascinating, isn't it? the u.k. -- everyone talks about the weakness in the u.k. economy. in the car sector, the only one -- >> did reasonably well. >> did reasonably well. meanwhile, weak demand for
european autos affected new car registrations, down 19.5% from the year earlier. the company wants to cut 17,500 jobs in france by 2016. stefan rejoin us from paris with more. >> it's about 14% of the work force renault said yesterday, for the remaining 1/3 the company hasn't fight yet what it's going to be -- hasn't said yet what it's going to be. honda wants to improve competitiveness and reduce capacity in europe where it's facing a sharp decline in new car registration. you stated 19.4% decline for the months of december. 18.8% also which means french carmakers are still losing market shares in western europe. meanwhile, honda is pushing workers to accept a new -- new
conditions in terms of salaries and working time in order to lower the costs level of its french factories. it wants to align the cost base to its cheapest factories in europe. mainly in spain and the united kingdom. nor come later this week on. friday the company will unveil its commission results for 2012, which we know already are not going to be very positive. over to you. >> all right. thanks for that. we'll keep our eyes on reaction. more to come on the car markets, as well. and a reminder, we're look at live pictures of the helicopter crash site in central london. we believe the helicopter hit the crane on the side of that building. and subsequently crashed off the road nearby, the road that runs down from vauxhall sort of bridge round about past the new covenant garden. if you were going to walk from the over cricket ground to the battery power station you would
probably cross the intersection as you see. and of course, not far further down the river is the heliport. police telling us there have been two confirmed dead after the crash. they do not believe the crash was linked to any form of terrorism. a new survey by earnst and young reveals most companies are using divestments as a short-term tool to make fast cash rather than taking the long-term view. joining us is global vice chair at earnst and young. good to see you. >> good morning. >> thanks for joining us. this is interesting. a lot of companies are supposed to be rolling in cash. why are they then so desperate to generate short-term cash from divestments? >> well, divestments in the past have been treated as a technical short-term tool so that you're raising cash and paying down debt. but what we're seeing now is that if companies actually start to think more strategically
about their divestments, they can realize optimal values in it. >> they may be able to do that, but what is suggests is that deleveraging is still aggressively happening. when you talk about the number of companies in 2013 and it's a lot of the people you surveyed, almost 3/4 i think who are looking to pursue this, often in many cases using those proceeds even if they are generated earnings for themselves to pay off debt. so it doesn't seem as though we're necessarily out of the muck so to speak. >> no, we're certainly not out of the muck. as i say, the bulk of the companies have been using it as a tactical short-term measure. we are seeing a shift in sentiment, a shi-- a shift in rationale where growth is zero, they are using it as a strategic growth tool and say figure you do it properly, put a lot of time around it, you can maximize your value because there a aare -- competition out there, competition for attractive -- >> you're saying values are high? >> that's exactly right.
we are sieeing competition. >> if they're selling, what are they going to do with the money? >> well, that is the key play of this study which is saying we're using it now, and we're starting to use it more as a strategic tool saying we would be better off selling a pretty attractive asset that's not core to our strategy in saying let's monetize it, let's reinvest it back into the business for something that is actually going to align to our strategic objectives. so you're using your money and allocating your money more effectively. and we're starting to see that trend coming forward. >> still it would be a better sign from the global point of view if companies were able to see revenues growth, earnings grow because of organic developments, not because they were selling off parts of the business. >> well, i think that's a good point, but it is a movement that you've seen more in developed countries. they have been using every opportunity they can. they're starting to see the selling as the new buying opportunity if you like. really going back to the core assets. really aligning them. if there is a good price that
you can get, that is a good tool to use. >> are we talking about large cap companies here in general, or is it across the spectrum in terms of the size of companies? also, is there a notable concentration in geographical areas where they're perhaps doing more diverse -- >> i'll try and pick those questions off one at a time. >> sorry. >> it's a trend that we're seeing more in -- it's all companies, so we went right across the globe. we went across all the territories. i think if you break it down into geographies, you've seen more of this trend in the developed countries. so the developed countries through europe, u.s. in particular. if you're looking at asia, for example, there's still a lot of growth opportunities through more traditional methods. as we were saying, building up products, opening new channels, et cetera when all of that has been used up, you're starting -- companies are adept all the time and saying, okay, how can i redeploy my capital more effectively and monetizing an asset that isn't on core and isn't going to do well for them in the long term.
it's better to sell it, reinvest it back to the business. >> so if you -- >> sorry, i didn't mean to jump in. sounds like the days of the conglomerate are over to some extent. >> well, we are seeing some of the ckoconglomerates saying we t to go back to selling off noncore assets and going to pricing saying some assets are atracktive. i think that we could see a shift down into a more basic, simplified corporate structure. >> if they reinvest the proceeds into something productive, it's good news. if they sit on the cash and -- -- >> i think it is good news actually. >> okay. good to see you. thanks for joining us. global vice chair of earnst and young. still to come -- >> europe's central bank expected to reveal interest rates amid slow economic growth. is this the end of the samba surge?
welcome back to the program. let's take a quick look at what's on the agenda in asia tomorrow. australia will post its december jobs figures. we could see a rise in the unemployment rate. on the corporate side, the country's energy major santos and resource company iluka will follow with their fourth quarter
output figures. earnings on tap include results from the world's largest contract chipmaker from taiwan and india's technology. and the ppi data is due. turning to brazil, the central bank is expected to hold interest rates at a record 7.25% low today. this despite mounting growth fears. economists polled by the central bank see brazil's growth slowing to 3.2% this year after hitting a record high 7.5% in 2010. joining us for more, julian thompson, global head of emerging markets at axo. >> good morning. >> it's interesting, we cited strong growth since 2010. but since brazil's growth has disappointed, it doesn't look like it's going to pick up, why are rates so high? >> in real terms, rates aren't particularly high, 7.25%. inflation running just below 6%. by historical standards, actually rates in brazil are extremely low. they've tended to be 10% in real terms. >> wow. >> don't forget they've come all the way down from 12.75% a year
and a half ago. so the -- the central bank has actually been extremely aggressive in lowering rates. >> i would imagine, too, that they are concerned about price pressures. what's happening on that side of the equation? and what do you think the central bank is likely to do in -- for the rest of this year? >> consensus is that they'll stay on hold for quite a while. we think they'll review the situation in march. the growth figures have been disappointing. so if we don't see a pickup in growth, we expect that we could see further rate cuts in march. >> it depends on your forecast for what happens to inflationary pressures, are they going to subside? >> i think they're less focused on inflation and more focused on generating growth. >> do they need to be able to come out with a cut, will they need inflation to drop? i mean, i presuming they're not cutting today because they're still i think -- we've done a lot, inflation's higher than we'd like. >> i think brazil is pursuing a less clear inflationary targeting program. don't forget, the inflation target is 4%, they're running at
5.8%. they're well above that. the central bank's projection is that inflation in the medium term, a lot of central bankers talk about the medium term which they probably mean two years hence, will see inflation fall within that range. they're comfortable. and we have electricity prices expected to fall 20% in february, which will also have an impact on inflation this year. >> how will the government manage to implement some growth sort of strategies? i mean, unemployment's at a record low. and -- >> in fact, one of our guests later will tell us that brazil is going to add the most jobs of the top ten biggest economies this year. >> yeah. unemployment's 4.9%. so, you know, the labor market in brazil is extremely tight. and real wages are growing strongly. consumption's not an issue in brazil. lowering rates doesn't really help them. what's struggling is industrial production. we've seen a big disconnect between industrial production and consumption. so the government is trying more
supply side measures to improve brazil's competitiveness. of course this takes time and repeated government intervention in the economy is undermining confidence. and what has really been weak is investment. >> are labor costs quite high? >> labor costs are quite high. and brazil is a pretty protected market. so you have to have a certain amount of local components, and that really just increases the brazil costs for a lot of manufacturers. >> the biggest impact that could be on brazilian growth this year, is it actually just the government crossing their fingers and hoping china comes out of the slump? >> yeah, the chinese policy that you need to watch. >> yeah. >> of course brazil has benefited significantly from strong demand in china for commodities. but we don't see china investing in the same way that it did in 2008. it hasn't got the capacity to do so. so infrastructure's not going to be a massive driver of growth in china. and i think brazil will,
therefore, benefit less this time around from recovery in chinese growth. and it really is about brazil finding domestic sources of growth. the projection, the finance ministry's projection is for 4% growth next year. we actually think it will be below 3%. so -- >> you mentioned one interesting point that i want to follow on. is it perhaps relaxing some of those trade levies that exist and that require them to use some of the higher cost domestic suppliers that could be one area where if you want to turn to some of the supply side problems, it's time to be addressed? >> i think what brazil needs to do is attract more investment. and to do that, it still needs to offer investors good returns on capital. driving down returns on capital is probably not the answer. and we're seeing a little of that at the minute. we do have the world cup in brazil, 2014. we have the olympics. so there is a lot of demand for investment. but finding the capital has not
always been as easy. and in fact some of those projects are behind schedule. so there's an enormous amount to do, but it's about attracting capital at the right rates to give investors the appropriate returns. >> fascinating. you'd think now would be the time, as you say, with the major events coming up for all of this infrastructure and investment to happen. but julian thompson from axa, we'll follow the story with you. thank you very much. bottom line, central bank on hold. other measures needed i guess. >> yeah. meanwhile, focus in the u.s. today very much on earnings by a pair of banks. jpmorgan and goldman sachs. jpmorgan reports its fourth quarter results at 7:00 eastern. profits are forecasted to rise 29% and revenue 10%. the london loss won't be included but the company issuing two separate reports on what exactly happened and the fallout. the new cfo will run the earnings call for the first time. goldman sachs reported its fourth quarter numbers -- reports its fourth quarter numbers at 7:30 eastern. forecasts will double and
revenues rising. banking and lending revenue, both stocks in frankfurt today. jpmorgan's up 1.7%. goldman down just under 8%. pierce, what are you looking for from these banks? and are they the most important bank earnings for you? >> no, not really. i'm much more interested in tomorrow when we have bank of america and citigroup. i think that gives a much better kind of signal to the underlying economic conditions traditional banking. these guys, jpmorgan and goldman, of course it's all about investment banking, a lot of it. i saw in the "f.t.," goldman's backed down on their bonus threat to delay bonuses until after the end of the tax year. so that just case in point. these banks are actually -- it's all about p.r. and damage control at the moment for both jpmorgan and goldman's. and i think -- >> what are you watching? what's going to be your barometers from them or tomorrow? >> tomorrow. i see -- citigroup, actually i think they'll be looking favorable. they've had a load of analyst
upgrades in the last few weeks. and i think citigroup is actually -- again other another story. both of these banks, citigroup, new ceo. the new banking world. it's getting the structural reforms in place. it's streamlining a little bit and getting back to basics. the excesses of the prefinancial crisis have gone and they're gone forever. these banks need to get back to basics. >> return on equity? >> yeah. yeah. so i think citigroup pretty attractive actually. >> at these levels. all right. >> thank you very much. pierce from amplify trading. and we've been reporting on a helicopter crash in central london. at least two people killed. these are the latest pictures from the area. just around vauxhall near the new covenant garden market. the helicopter hit a crane and then has crashed with two fatalities. the police are saying there's
nothing to indicate that this crash is linked to terrorism. now straight ahead on the program, spain has put the pal in germany's court -- the ball in germany's court urging creditor downs do more to save the eurozone. but are they barking up the wrong tree? we'll speak to ewald nowotny after the break. [ male announcer ] here's a word that could give you peace of mind. unbiased. some brokerage firms are. but way too many aren't. some of the ones that push mutual funds with their names on them -- aren't. why? because selling their funds makes them more money. which makes you wonder -- isn't that a conflict? am i in the best fund for me, or them? search "proprietary mutual funds". yikes, it's best for them. then go to e-trade. we've got over 8,000 mutual funds and not one of them has our name on it. why? because that's not the business we're in.
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welcome to "worldwide exchange." if you're just joining us, i'm kelly evans. >> i'm ross westgate. here are your headlines -- >> two japanese airlines ground their 787s an a dreamliner makes an emergency landing. transport officials worldwide step up scrutiny as boeing's safety troubles rise. a helicopter crashes into a crane in central london. british police say there's been two fatalities. auto stocks take a hit after data shows europe logged a 17-year low in new car registrations last year. with a 16% decline in december. plus, a big day for bank earnings in the u.s. reports from jpmorgan and goldman sachs before the opening bell.
all right. if you've just joined us on "worldwide exchange," welcome to the start of your global trading day. particularly stateside. we'll get an early sentiment shift when we get those bank earnings out from goldman sachs and jpmorgan. ahead of that, this is what futures are indicating at the moment. the s&p is some three points below fair value. the nasdaq at the moment five points below fair value. the dow at the money is some 53 points below fair value. we are fight for a softer opening. the earnings may change that tone. this after european stocks also a little softer, subdued start to trading today. we're on the session low for the footse 100, cmc global 300, off .3. the ftse down 31 point. .3 for the xetera dax, cac down 3%. the ibex down 7%, as well. car stocks under pressure after disappointing car registration data for individual companies, as well. there have been standouts, but by and large, weak -- weaker
than expected. that's where we stand as far as stocks are concerned. we'll show you where we are on the bond yields at the moment. ten-year treasury yields are actually slightly lower, 1.81%. italian yields, 4.24%. worth pointing out with a six billion syndicated yesterday, they've filled 10% of their requirement there's year. they frontloading the year as they should do. spanish yields over the 5% mark at the moment. and on the currency markets, euro/dollar contained here, 1.3274. just come away from the 134 level for euro/dollar. we saw jean claude junker saying he thinks the euro exchange rate is dangerously high. dollar/yen coming back down from its 29-month high, 89.88. aussie/dollar above 1.0542. and in asia, joining us with the
recap again, more from singapore. thank you. most asian markets finished in negative territory. the nikkei suffered its worth daily drop in eight months despite upbeat machinery orders in november. a rebound in the yen triggered profit-taking in exporters. shares of al nippon airways slipped 1.6%. some boeing suppliers such as battery maker gs uwasa tumbled on the back of the dreamliner's safety crisis. in china, the shanghai pulled bant .7% after hitting a 7.5-month high yesterday. developers continued to lose ground after the strong gains since q4 last year. and this despite talk of delaying the property tax reform due to insufficient planning and lawmaking. in hong kong, all eyes were on the chief executive's policy speech with a focus on measures to promote middle-class homeownership. developers reversed earlier losses to finish in the green. telecos and energy majors dragged the hang seng lower by .1%.
elsewhere, south korea's kospi finished marginally in the red. apple suppliers continued to weigh down the market over demand concerns on the iphone 5. the australian market bucked the downward trend with the defensive telecos and stocks lending support. back to you. >> thanks. the big event of the day today's u.s. earnings will be topped by big banks, jpmorgan and, yes, goldman sachs. jpmorgan reports fourth quarter results at 7:00 a.m. eastern. profits seen up 29% and revenue 10% from a year earlier. the london loss won't be included in the earnings, but the company is issuing two separate reports on what happened. the new cfo will run the earnings call for the first time. and goldman sachs will follow at 7:30 a.m. eastern with its profits expected to double. revenues up about 30%, too, from a year earlier. analysts looking for an increase in investment banking and lending revenue. jpmorgan shares have been an
out performed, up nearly 2%. goldman, though, heading toward session lows. it's down about 1%. coming up in the next half-hour, we'll discuss the health of the rest of the u.s. banking sector with todd hagerman from stern a.g. and a slower than expected recovery in developed economies is weighing on global growth as countries continue to battle spending cuts, high unemployment, and weak consumer confidence. that's according to the world bank which just cut its 2013 global growth forecast to 2.4% from 3% earlier. meanwhile the german government is expected to slash in half its full-year growth outlook had it releases its -- when it releases its annual economic report today. berlin will forecast growth of around .5%. against that backdrop, the spanish prime minister is calling on germany and other creditor countries in the eurozone to do more to still plate growfinancial -- still financial growth. it's argued that it would help
support recoveries. it's been noticeable that central banks have done a lot, but the pressure's firmly on governments. is that the view in vienna? geoff is there at the euro money conference. central bankers have been proactive in dealing with this. and they keep asking politicians to do more. i'm guessing the message is still the same. >> reporter: yeah. that's a great point, ross. i mean, this -- this really, really plays to the tension that we continue to see around the story. countries are being encouraged to embrace austerity, but they also want the support that they know that central bankers can provide through the monetary mechanism. and of course we've seen the fed respond. we've seen the bank of england respond, and we've seen the ecb step up. but of course there are those who continue to say we need to see more done to easie l liquid.
and we have more now from the head of the austrian central bank, ewald nowotny. thank you for giving us your time on this chilly convenient ease morni-- viennese morning. we've seen a disappointing fourth quarter in germany. we have mr. lahoy saying creditor nations need to do more. and i think the spanish even though they haven't asked for the omt to be triggered would like to see more easing of current liquidity decisions. are you disappointed that the growth numbers that we're getting in europe are really not taking us in the right direction? >> well, i would not overestimate the situation concerning the latest news we got from germany. this is within -- in the context of our expectations. we know that 2013 will be a year
with low growth for the euro area as such even slightly negative for germany, positive for austria and the other countries. it will be -- [ technical difficulty ] >> rather depressing -- >> the european officials heard him say growth might be slightly negative for the year and cut the feed. >> we will try and patch that up and get geoff back. >> yeah. >> just -- just one of those things, right? >> no -- >> we've got a live satellite link. we'll work on that and try and bring geoff and mr. ewald nowotny back. we'll bring you back up to speed with the helicopter crash site in central london. these are pictures of the fallout from the crash. remember, police have confirmed two fatalities. this is the building with the crane which we believe the helicopter hit, that is right near vauxhall bridge, as well.
and we understand that the helicopters crashed near the road that comes away from the vauxhall roundabout. it is close to the new flower garden market, as well. our apologies about the interview from vienna. we'll try to repatch the technical issues that we've got with that. in the meantime, facebook's unveiled its new graph search. grf or graph? >> i say graph. >> okay. >> graph, yeah. >> big question -- >> yeah, the question is how much will investors like the product as we ponder the pronunciation. we'll have more coming up. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪
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right. a short while ago, geoff was speaking to governor of the austrian central bank before we were rudely interrupted. now let's re-establish contact with geoff and mr. name unanymousl -- and mr. ewald nowotny. hopefully you can hear me now. mr. nowotny was talking about the euro exchange rate. pick up there. >> reporter: let me pick this up. sorry about the technology. let's take it from here. so jean claude junker says the euro is overvalued s. he right? >> as we know, at the ecb we do
have a price stability goal. we do not have an exchange rate goal. so there is no direct policy of the ecb with regards to trade. and i personally think what we have seen is there has been, of course, quite volatility of exchange rates within small borders. i would not over -- give too much weight to all of this. >> reporter: you wouldn't play -- overplay that story at the moment. we'll put up with this man going by for a second here. there are those that are concerned this europe might get dragged into a currency war. and now we have the japanese buying european bonds in a sense in a way to weaken their own currency. ed some we be concerned about this? >> well, what we learned from
history is that of course currency wars are self defeating for all of those concerned. i do not see a problem in this way for the time being. >> the high yield debt markets slipping below 6% on the yield. we see them falling below in some cases creditworthy corporate bond as much the market mispricing risk? >> we have seen sometimes that markets have problems in correct pricing of risks. basically i think the development that we see is a development of stabilization. so the tendency is the right one. whether the velocity is the correct one we will see. but basically i'm not concerned about this. i think it's an element of stabilization. >> reporter: is it in the short
term markets getting carried away, but we can expect normalization as they understand some of the constraints that we still see in the economy around the monetary transmission mechanism? >> yes. that may be. but i -- i basically interpret this that, say, the fundamentals of the economies concerned are improving. and of course markets are forward looking. therefore, i think it is in the right direction. there might be, of course, some hiccups in between. basically i think this is an element, sign of the stabilization we have to expect for europe. >> reporter: you've been very patient with us. let me wrap up with a last question. there is a story that a number of the banks are going to try to rush to pay back some of the emergency funding they took from
the ecb. do you think it is appropriate at this point while we are still in the midst of this crisis for these banks to start trying to pay the money back now? >> i think it is an indicator that european banks are in a different rentiated situation. we do have strong bank and i think for those that have no liquidity problems it makes sense to pay back. we have, of course, also other banks. but in general, i see this as a positive element. and i welcome this again as a sign of the stabilization of the euro area. >> reporter: would you give advice at the ecb about whether they should take those steps themselves, or is it down to their own assessment of their balance sheet and risks? >> this is clearly down to the own assessment of the banks. all the more as we have a great variety in the situation of the
banks. so they have to see this under their own risk and liquidity perspectives. but basically also we have seen that banks are taking up less money from the ecb. so all this shows that -- dependency of banks on the ecb is decreasing. this clearly is a good sign. >> reporter: you've been very patient us. thank you very much. it's always a pleasure to catch up with you. >> thank you. welcome to cold vienna. >> reporter: thank you. i can let you go. thank you very much, sir, for standing by and bearing with us on that. good-bye. ross, there you have it. a very, i think, frank and reasoned assessment of the current state of the ecb and its position with regard to the european economy. and i think mr. nowotny interesting on the question of how we see pockets of strength in the european banking system and banks that perhaps are more liquid, they are still very profitable. perhaps they can take the
further step of repaying some of that emergency funding. i think broadly this is a man who believes that we have come over the worst of the hump of this crisis in europe. and things are going to gradually improve. of course, it's going to take a little while before we start to see any of that, i think, turn up in the growth data. and boy, that fourth quarter from germany was something of a stinker. those car sales numbers really don't encourage you to believe that citizens across the e.u. bloc are keen to go out and spend on big-ticket items. there is a mismatch at the moment between the confidence we really see on the ground, both in central and eastern europe and core europe and what mr. nowotny feels is going on with the fundamentals of the broader economy on. that point, let me send it back to you in the studio. >> yes. was it -- was it just coincidence that we lost the line after he said 2013 would still be slightly negative for the eurozone in terms of growth, geoff?
i wonder. >> reporter: yeah, is that a rhetorical question? >> i wonder whether somebody had an issue with him saying that next year was going to be negative for the eurozone. anyway, they pulled the plug. i don't know. >> reporter: yeah. i think that's a good point. i'm slightly suspicious, as well, since this was our keynote interview this morning. we were keen to make sure we nailed it down and then to have a technical snafu doesn't help you very much indeed. but again, i want to pick up on one of the other things he said which i don't think he said anywhere else. that's why it's important that we did that interview. this question of currency wars and the japanese engaging in the purchasing of european emergency debt because that is a way for them to weaken their own currency. clearly there are those in the eurozone that get it. that it is not good for europe to have a currency that is appreciating. i'm not sure if it tells us very
much about the strength of the european fundamentals. it does tell us an awful lot, though, about how the japanese and even the americans at this point see themselves getting competitive advantage in a world where we have relatively weak consumer demands. ross, back to you. >> yeah. there's always another side to any currency pairs. thank you very much indeed for that. that's the latest from vienna. >> great stuff there. if you're just joining us on the program today, here are your headlines -- nightmares for boeing after two japanese airlines ground their 787s due to a dreamliner making an emergency landing. a helicopter crashes into a crane in central london. there have been two fatalities. a big day for bank earnings in the u.s. jpmorgan and goldman sachs due to report before the opening bell. still to come on the program, job cuts continue to shake the global labor market. what does 2013 look like for employers? ♪
welcome back to the program. as major companies around the world continue to announce layoffs, which regions are best and worst poised to weather 2013? tony roy, president of careerbuilder emea joins us. welcome. >> thank you. >> you guys are just out with a look for 2013, the best and worst of the bunch for the top ten biggest countries around the
world. who's hiring and who's not? >> the good news is a lot of exciting stories, particularly like in the brit countries, brazil, india, for example, have greater than 2/3 of employers that are expected to hire this year permanent, full-time headcount. the ones that are more -- struggling more are places like italy, for example, which is the largest amount of employers there expected to decrease permanent full-time hiring, and japan is relatively stagnant. >> it's not a good sign for japan that it's still basically at the bottom of the barrel. it is interesting that italy really comes in last place here. how does that compare with what you've seen in previous years? >> well, i mean, it's -- the last few years, italy's been volatile when it comes to the hiring market. in comparison to the rest of the european market, it's been along the lines of a spanish or even potentially like the dprek market. in comparison to -- greek market. in comparison to the u.k., it's more encouraging. 30% of the people we surveyed are expected to hire full-time permanent staff. only 15% were expecting to decline. so you're seeing a net growth
there in the u.k. >> is there then a sense that this is a direct reflection of the crisis that has gripped europe, or is this more of a long-term trend? >> well, it's a mix of both, right. depending on the sector that people are operating in and the type of staff that they're looking for, it's either very confident outlook or cautious outlook. >> what are some examples? >> i think examples are software development, anything related to i.t. because it spurs innovation and drives efficiency. sales positions because it's driving revenue and building to the customer base. and obviously the customer base is key. there's an agency that has formed in silicon valley. a talent agency for software developers like you would have an agent for a professional footballer or celebrity -- >> are you kidding me? >> they taking 10%? >> not i don't exactly. >> an access or recruitment -- an agency or recruitment? >> absolutely. if you have tom cruise as agent
-- there's such high demand across the world that you're starting to see the birth of this type of business unit. >> not such a good 2013. no one has an agent if they work for renault, i would imagine. the car company, we mentioned in the headlines, continue to be under pressure. one area where i'm sure you're not seeing growth. >> not encouraging. i think you have to remember, bmw is a customer of careerbuilder's in the german market. they do have a lot of hiring needs, but again, you're seeing them in specific areas, places like software development, sales, things of that nature. even in those industries. now some of the other positions that support those roles, support other aspects of the business, you're seeing those being stagnant or declining. >> replaced by the innovation that the all-star developers are developing? >> that's exciting. >> yeah. tony roy, president of careerbuilder emea. again, those brit countries at the top of the pack. tony, thanks. >> thanks. let's remind you what's on the u.s. agenda today. the december cpi out at 8:30 eastern. 9:15 we get industrial production. at 10:00, the national
association of homebuilders releases its monthly housing market index. also a big day for earning, of course. >> that's right. we'll get jpmorgan and goldman sachs before the opening bell. also important to watch, bank of new york mellon. m&t, northern trust, and u.s. bank. major regional bank which will be a gauge of citigroup and bank of america which will follow tomorrow. still to come on the show, we'll talk about banks. also mobile devices, cloud computing, attracting and retaining new customers. what are the priorities for the top corporate i.t. executives? we'll take a look at futures as we head to break. looks like we're pointed down yet again. we'll be right back.
welcome back to "worldwide exchange." i'm kelly evans. >> i'm ross westgate. let's recap the headlines today that we have from around the world. two japanese airlines ground their 787s after a dreamliner makes an emergency landing. transport officials worldwide step up their scrutiny of boeing as safety troubles escalate. helicopter crashes into a crane in central london. british police say there have been two fatalities. it's a big day for bank earnings in the u.s. top reports from jpmorgan and goldman sachs before the opening bell.
a familiar pattern here for us in the last couple of trading sessions has been to see u.s. futures pointed lower only to enter the trading session and rally higher. typically a reasonably good sign of a bull market. but not sure we want to go that far. we can tell you that after extending its win streak to five straight, the dow is pointed lower today. the question just remains as to whether it will reverse gains as it has in the past several trading sessions. down 42 points at the open. the nasdaq and s&p also pointed lower. dow jones transport index, by the way, the s&p 500 closing at fresh five-year highs. the dow jones transport index, i believe, also closing at highs. european markets overnight, these have been a little bit moving around. for the most part, down on the magnitude a half a percent for the ftse. .25 for the xetera dax. .30 for the cac, and ibe ibex, .71%. some concern showing in the periphery. so how do you make money in these markets? here's what some guests have been telling us this morning.
>> we're going to have some rebound in the dollar. we're going to have? rebound in the yields. but the rebound in yields is in no way going to detract the economy or is going to detract this rally. >> russia was the big laggard. i think the surprise to their year could be that russia could do pretty well. >> very, very attractive in europe. we actually are overweight, european quits. but in core quality names, that's very important. all right. just checking on the euro/dollar, the cross rate has moved around. euro/dollar, the session back over 1.33 from below 1.3250. this is after the interview we conducted with ewald nowotny. geoff taking that interview in vienna. the austrian central bank
governor who said that basically banks are less dependent on ecb support. there may be banks who will pay back the ltr three-year loans early. that's having that impact on euro/dl euro/-- eauro/dollar. and saying that it was too strong -- >> maybe because ewald nowotny was in front of a green markets. psychological. we want to look at companies around the globe which are starting to outline and deploy theirity budgets for 2013. a new survey for from gartner of more than 2,000 cios in 41 countries finds plans for total spend down .5% in 2013 with digital technology, mobile devices and cloud computing, among their top priorities. joining us in a first look at the survey is mark mcdonald, group vice president of gartner's executive programs. mark, good morning. so down half a percent. let's start there. this actually is a continuation
of a long-term trend. is it a headwind for tech companies? >> well, it's not so much of a headwind as much as a realization that there needs to be a transition from what i.t. has been to what technology needs to be in the future. across those, you know, 36 different industries, we see organizations kind of moving from technology kind of tending to current operations and a focus on cost and doing more for less which really meant more about doing less to trying to realize more growth and value through the application and deployment of digital technologies like mobile computing, analytics and big data, et cetera. really driving those business demands for growth and operational improvements. >> the message then is that the pie itself may be staying roughly the same size. that means there are going to be winners and losers. so as these cios shift their spend and start to look at things like the cloud and all of these new terms, these new
markets, who are going to be the winners and losers? what specifically do you expect to see? >> well, i think the winners and losers that we're starting to see are ones that say, you know, i no longer have a pie. i'm trying to create a digital cake. i'm trying to deploy these technologies in ways that change the customer experience, really look at creating new sources of value. the early leaders in this area are really showing a difference here. we did some studies for a book we published called "the digital edge" where we found companies that had above industry averages of digital technology were actually outperforming their peers by growing about 7% faster and margins being about 10% better. so we think the context for technology investment is actually changing. and to continue to view i.t. is kind of a back office thing as a digital technology front office growth engine where you hunt and harvest for value is really the difference that executives are
looking for. >> okay. mark, thank you very much. mark mcdonald, v.p. of gartner's executive programs telling how more cios are looking to the cloud. investors will get a closer look at tech when ebay 2006 off the fourth quarter earnings after the close today followed by results from intel on thursday and a slew of other big names next week. this is reuters' report, suggests that the tech sectors due to drag on u.s. earnings. according to it, wall street expects the tech sector's fourth quarter earnings to be down 1.1% from a year ago. it will be the first drop since the third quarter of 2009 even though overall s&p provirity still forecast to show growth. now cnbc's david facebooker is reporting a buyout deal for dell could come in the next two weeks and the price between $13.50 and $14 a share. with equity entitlement from silver lake partners and others of $1 2 billion altogether, del is considering repatriating some overseas cash in order to lower the amount of equity that would
be needed to complete the buyout. shares were up 7% yesterday. they gave back more than 1% in an after-hours trade. and looking to shed another 1%. down 2% altogether in frankfurt this morning. >> big chunk of change for an lbo, though. meanwhile as boeing struggles with its safety troubles, we'll be talking to phil lebow live from chicago, give us the latest on what this means for the future dreamliner program. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
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we'll look at other stories from around the world. the u.s. treasuries tapping government workers' retirement funds to avoid hitting the debt ceiling. the treasury previously estimated the move would give it around $156 billion in additional borrowing capacity. it says retirees will still receive their benefits. in a letter to the house speaker john boehner, the treasury secretary says this step has been taken before during previous debt limit impasses. several conservative republicans are set to introduce legislation to direct treasury to prioritize debt payments if congress doesn't raise the debt ceiling. and president obama will unveil his gun control plan today at 11:45 eastern. he's expected to call on congress to ban military-style assault weapons and the type of high-capacity ammunition used in last month's school shooting in
newtown, connecticut. the package will also include efforts to stop school bullying and invest available mental health services. may include several steps the president can take right away without congressional approval. the house of representatives has passed more than $50 billion in aid for hurricane sandy victims. this more than ten weeks after the storm ravaged the northeastern u.s. the vote was 241-180. several republicans voted no. conservatives failed to offset part of the bill's cost with across-the-board federal spending cuts as some had wanted. the senate is likely to accept the measure and send it to president obama to sign next week. and japan's top two carriers, ana and japan airlines, have granted all their boeing 787s today and tomorrow. it's after one of ana's jets made an emergency landing earlier following a battery fault warning. all passengers and crew were evacuated safely, although five people were slightly injured. joining us now on the telephone from chicago, making it 3-3 this
week on "worldwide exchange," cnbc's phil lebeau. good morning to you. when you heard the news, what was your first thought here? how bad is this getting for boeing? >> it's serious. any time you have an emergency landing, that raises the level of concern substantially. and initially, there were reports of smoke in the cockpit. those reports are not clear. eventually when there was a press conference in japan, a spokesperson for ana said, listen, the pilot smelled what -- what appeared to be smoke. they did not see smoke. so there was a burning smell that they noticed in the cockpit. that was part of the reason for the emergency landing. but the bottom line is this -- whether or not you saw smoke or not, this raises the level of concern regarding the dreamliner because now you have two incidents involving the lithium ion battery which, as we've talked about and as you've
reported, the problem with these batteries becomes the amount of energy and the flammability involved when you're taking in as much energy as they take in and regulating how quickly it comes out of those battery units. so that's the concern is, is there a systemic problem with these lithium ion batteries? if there is, then we might be looking at a situation where boeing says to its customers let's ground all these planes until we figure out a solution here. >> yeah. phil, look, we know there were delays in this program. is there any concern here that they -- in the construction then that they rushed the build-out? is this a design kind of issue, or is this because it's a -- a manufacturing issue? >> most people i've talked with -- first of all, boeing does not know how to answer. they say that there is not a design issue here. or i'm sorry, a manufacturing issue here. but most people that i've talked with who are familiar with this program, both within boeing and outside of boeing who have
worked with the company, they believe that what we're ultimately looking at here is a situation involving the use of these batteries driving the electronics on the dreamliner. remember, shortly after the first incident in boston, boeing held a -- a conference call, and the head of safety and design for boeing said we could have used other batteries. we believe that lithium ion batteries are the right choice. they put out more than -- put in more than a million miles with these batteries, flying with these batteries. and they believe that they are safe. well, now you've got two incidents. real world incidents where it appears that something is seriously wrong with the electronics here which then raises the question, is this a design issue? did the use of lithium ion batteries ultimately cause these two incidents which involve if not a fire, there definitely was a fair in boston, but in japan yesterday, you have something that appeared to be a fire or
there was some kind of burning going on involving the batteries that raises the question should these batteries be used. >> yeah. a fair point, phil. thanks for joining us this morning. plenty more throughout the day on cnbc. we showed component manufacturers. the one in the middle there, gs uasa corporation, is a supplier that makes batteries. no comments this morning. say it's too early to comment on the situation. but we've got other supplies in japan, triindustries, supplies carbon fiber. and fuji heavy industries, mitsubishi heavy industries. if you're a global player manufacturer, your component suppliers come from all over the world. >> which is interesting. as much as this involves japan, they involve japanese suppliers, 4.5%. investors rendering their initial verdict. >> and india, the only other asian airline to take -- it deliver so far flying them, also considering whether to ground their planes, as well. >> we'll keep you updated on
details. if you're just joining us, these are the headlines -- nightmares for boeing as we've discussed after two japanese airlines ground their 787 fleets due to a dreamliner making an emergency landing. a helicopter crashes into a crane in central london. british police say there have been two fatalities. a big day for bank earnings in the u.s. jpmorgan and goldman sachs report before the opening bell. still to come, ewald nowotny seeing signs of hope for segments of the european banking sector.
phone at the scene. tom? >> that's right, ross. the helicopter collided with a crane on the side of a 50-story building here in vauxhall at around 8:00 this morning. that's the peak of london's rush hour. the metropolitan police telling us now that there have been nine injuries and two deaths. we have been within about 20 meters of the crash site. two very burnt out vehicles, cars that caught on fire when the helicopter landed, and debris all over the road. it has caused huge congestion and transport and travel problems here in london, some of the main roads around the site have been closed off, and police describing it as a major incident. there are concerns about the safety of this crane attached to this 50-story tower. and some concerns over whether or not it will remain stable.
the police keeping a close eye on this, and engineers expected to be inspecting the crane very shortly. this is an ongoing situation obviously. and we are getting updates on upon number of casualties all the time. one police officer did tell me a small piece of good news was that the crane driver was late for work today, and so had a very lucky escape. >> all right. tom, thank you very much. now let's look at u.s. futures. the s&p 500 did hit a fresh five-year high yesterday. today looking to give up some of those gains. dow is pointed lower by about 43 points, too, although transports have been rallying, and there's plenty within the market that's been generating headlines. let's look at what's on today's agenda in the u.s. december cpi out at 8:30 a.m. eastern. expected to show a headline drop
of .3, an increase of.2 on the core minus food and energy. at 9:15, december industrial production figures will follow. these are ones to watch, expected to rise .3 from the previous month. at 10:00, the association of home builders releases its housing market index. a precursor for gains in construction. ross? the euro cut its losses this morning on the session. and rallied following comments by the austrian central bank governor, ecb governing council member ewald nowotny concerning the health of the european banking sector. he spoke to our very own jeff cutmore. >> we have seen that banks are taking up less money from the ecb. all this shows that -- dependency of banks on the ecb is decreasing, and this clearly is a good sign. today's u.s. earnings will be topped by two big banks, jpmorgan and goldman sachs. jpmorgan reports fourth quarter results at 7:00 a.m. eastern. profits seen up 29%.
tennessee%. the london wale will be addressed. and the new cfo will be running the earnings call for the first time. goldman sachs will follow at 7:30 a.m. eastern. profits expected to double with revenues up 30% from a year earlier. analysts are looking for an increase in investment banking and lending revenue. joining us now for where todd hegerman, analyst at stern a.g. todd, good morning. as we look to these two major bellwether banks, what are you expecting to see? >> well, we've got a bit of a preview on friday from wells fargo. coming into today's earnings reports, we're expecting pretty respectable results out of the core bank if you will. on the flip side of the equation, capital markets as you mentioned. i'm not really expecting much of a -- an inspiring quarter so to speak from the capital markets units. and that really relates to the
underlying flow activity during the course of the core which as you may know came to a standstill late in the quarter as concerns and uncertainty surrounding the fiscal cliff really started to elevate and customers really pulled back. so capital markets itself, not terribly inspiring on the quarter. certainly up year over year as you mentioned. but it's really going to be a focus today on what the ceos say, and their outlooks for the coming year. jpmorgan, as you mentioned, you have the london wale. again, i think the encouraging part about that, it's now being put behind them. and we're now going to go forward. it's really about the outlook for these companies as we go in today's reports. >> stuart kirk office earlier and said that investment banks -- investors were punishing big banks for exposure for the last maybe year or two post financial crisis. now we're maybe at a turning point where they've become more of a tailwind. would you agree that the outlook si brightening for this kind --
outlook is brightening for this kind of business model? >> i absolutely agree. we've been saying for some time that effectively these companies are trading off of what we would arguably consider trough earnings, if you will. so we think the downside risk is rather limited and to that end, i think as we go into the first half of '13, while we're not looking for anything robust in terms of underlying economic activity, these companies i think are going to continue to pick up as it relates to capital markets coming off of a pretty modest level, frankly, here at the end of the year. they're gaining share, companies like jpmorgan, goldman sachs, these companies dominate the respective businesses, they're taking market share, and they're going to continue to pose i think incrementally better results which is going to, again, fuel i think a tail wind in terms of the shares themselves coming off a very robust year in 2012. but we're still pretty positive on the outlook for 2013. >> yeah, you say it was a robust year last year. i'm wondering how we will trade
through these numbers. there's always the temptation, of course, to say we've had a robust year. if they meet expectations, we take money off the table. >> yeah. absolutely. and we're seeing that take place now. we've actually gone into the quarter advising clients that, hey, last seven years on average we've had this surge going into the earnings in the fourth quarter. only to fall back on the news. the remaining part of the month. and so in fact the last three consecutive years it's been spot on. surging in the quarter in terms of share performance, trails off on the news and in fact the month of january has been a relative underperformer versus those first couple of weeks into the year. we think that's going to be the theme over the next couple of weeks. we see that as the prospects today frankly. >> what would have to happen for that not to be the case? >> well, i think the critical factor is, again, the outlook for the ceos. jpmorgan today again, i think
what investors are looking for is what mr. dimon is going to say as it relates to the london issue. he's going to talk about how it's behind the company. the recent regulatory settlement earlier this week, big positive for the sector itself. and so you're starting to see these inflection points on the regulatory aspect which is very encouraging. we're still growing in terms of the economy. so again, i think that's a very positive sign coming out of the robust 2012. >> an hour until jpmorgan, 90 minutes until we hear from goldman sachs. thank you very much, sir. it's does it for us this morning. >> yeah. the numbers, of course, will be broken during "squawk box," the program that takes over now. we hope you have a profitable day from kelly and i. >> see you back here tomorrow.